The founder of Britain's first new bank since 1840 on why you need fans, not customers.

Vernon Hill is very – very – on message. Take a look at most of the interviews he’s done and you’ll see the same story, pretty much word for word. Why? Because the Metro Bank founder and chairman has a script, and he’s not going to let a little thing like the question get in the way of his answer.

You’ve got to admire it, really. It works. Hill says that since launching in London in 2010, Metro Bank has spent under £100,000 on advertising, yet its brand recognition is at 82%. More tangibly, in an age when we’re told we’re more likely to divorce than switch banks, it’s acquired 850,000 customers, in large part because Hill knows how to get good press.

‘Everything I do is about building new fans and strengthening the ones we have,’ Hill says. ‘We’re a retailer who happens to be a bank. We applied the common sense, successful ideas of retail to banking: let’s be open, let’s be nice, let’s make customers happy and not take them for granted. Then we learned to do it at scale.’

So Metro Bank doesn’t have customers, it has fans; it doesn’t have branches, it has stores. Want to open an account quickly? At Metro Bank it takes 15 minutes, with your debit card printed on site. Got loose change? It has free coin-counting machines. Got a dog? They get shown a fuss, not the door. You get the idea.

Hill’s do-you-want-fries-with-that approach to finance was nurtured in his youth, when as a real estate developer he drove McDonald’s head honcho Ray Kroc to look for sites. He then ‘woke up one morning’ and decided he wanted to open a bank from scratch, getting his license for Commerce Bank the next year at the age of 27.

‘When I started there were 24,000 separate charter banks in America. I was 24,001. When we sold out in 2007 we were the 18th largest bank in America,’ Hill says.

It took a week after selling for him to decide to bring the concept to the UK, where he has particular issues with the big retail banks.

‘I don’t need to tell you how bad it is. British banking is a widget delivery system. They see their customers as targets of opportunity for the next widget they’ll sell. We don’t even sell widgets. We say to our customers if you want to keep being abused by Lloyds, go ahead and stay with Lloyds, but you have a choice now.’

If the big five really are as bad as all that, you’d imagine they’d adapt to fight back, but Hill isn’t worried about that. Fundamentally, he believes, they are too corporate, too bureaucratic, too set in their ways to change.

‘Change in a business rarely comes from inside the industry and in a sense we are that change from outside. Entrepreneurs look at things in different ways. I make decisions no banker would make.’

Hill refers to the coin counting machines, which customers want. A retail banker at, say Lloyds, would need to take the idea before a committee to justify the investment. ‘The committee says what’s your return on investment, and you say no no, it’s free, we’ll just make more friends. That’s the end of your career at Lloyds. I probably spend half my life trying to prevent that bureaucracy.’

A useful tool in the battle with bureaucracy is Metro Bank’s ‘kill every stupid rule policy’, which incentivises employees and even customers to find ‘stupid rules’ and axe them.

Of course, some rules in banking are there for a reason...

‘We have to deal with the law, we have to deal with audit and compliance, but if we let those people, while doing their job, degrade the customer experience, we have failed. One of my never-ending jobs, and [CEO] Craig Donaldson’s is to comply but not let it degrade the experience.’

Business model vs culture vs blockchain

There’s another reason Hill is adamant Barclays, HSBC and the rest won’t be able to fight Metro Bank off – and bear in mind he wants ‘100% of the market’. It’s because service is in Metro’s culture in a way it simply isn’t elsewhere, and because culture cannot be grafted in.

‘It begins with the business model. You can’t build a culture until you know what the model is. If your model is about building fans through service and convenience, then you have to recruit, train and manage people who believe in that model. People say their company’s doing well because they’ve got great people, but there aren’t that many great people. Great models make good people better,’ says Hill.

They also invest in growth. Hill is disparaging about the big five banks’ unwillingness or inability to take risks for the future. ‘You can never cost cut your way to prosperity, you have to invest your way to prosperity. Look at the five banks here, they’re all in shrink mode.’

It’s possible it has something to do with the British temperament too. ‘Metro’s been funded with £1bn of private money, 90% of it American. You know why? British investors don’t believe in growth. They talk about it but they’ll never pay for it,’ Hill says.

So Metro Bank’s investing. It’s got a superior business model and therefore culture, and it’s taking retail banking by storm, with high double digits growth in loans and deposits.

That seems like a great 20th century shake-up of the sector – indeed, it’s exactly the 20th century shake-up Hill pulled off with Commerce Bank. But it’s 2016. Isn’t it too late? Won’t blockchain, crowdfunding and fintech sweep all banks aside, even the ones that let you bring your dogs into the branches?

‘The tech guys always have solutions but they’re looking for a problem. There’s probably space for [alternative finance] but it’s hard to see how they’d have a major impact. Peer to peer lending has collapsed in America – the banks end up funding it.’

Even the sector-warping impact of blockchain doesn’t phase Hill. ‘Maybe blockchain helps us move money around in the back end but it has nothing to do with clients, it’s just a mechanical thing.’

Banking, he believes, is therefore secure – at least from everyone apart from him. ‘Remember what a bank is... only banks can accept deposits. You can make loans, but I can accept deposits. So why shouldn’t we build our model around our unique legal advantage?’

And with that it was end of message, out of office. Despite all the smiles, it was all very transactional, very efficient – the kind of experience that makes you wonder whether maybe there’s more of the banker inside Hill then he’d like to admit.